Taxi Gets Cheaper Than Grab, Transport Ministry Sets 4 New Rules From Now

Earlier this week (Jul 4), FMT found that ride-hailing application Grab is starting to charge its customers higher price than conventional taxis. In its investigation, it’s found that a 5km or 10-minute trip by taxi is only RM7 whilst Grab’s service would cost RM14. The finding is the same when the trips are about 30 minutes long.

Many believed the Grab-Uber merger signed three months ago is the reason for the price hike as Grab is currently the monopoly in ride-hailing service. Conventional wisdom suggests that monopoly is never good for the public as the lack of competition granted the monopoly the freedom to control prices.

When talking to the drivers, a taxi driver told FMT that he started to see an increase in his customers lately as compared to the plunge he underwent after Uber and Grab were launched in Malaysia. A few regulars of Grab also told the news portal that the fares are getting higher due to the higher demand.

Before the merger, former Minister in the Prime Minister’s Department Nancy Shukri assured the public that the deal wouldn’t affect the fares but on Thursday (Jul 12), Putrajaya has confirmed the issue after receiving many complaints from the public. The Transport Ministry has initiated a study on the effect of having a ride-hailing monopoly in the country, The Edge reported.

Its minister Anthony Loke held a press conference to announce the new regulations in efforts to standardize requirements for ride-hailing service firms and taxi operators. The new regulations are in effect since the announcement but they are subjected to a one-year moratorium. However, those who showed a lack of commitment to comply within the grace period might face problems to secure licences, Loke said.

Here are four new regulations the Transport Minister introduced:

1. Commission Cap

According to NST, many drivers under ride-hailing apps imposed commissions up to 25%, making their service extremely expensive to the customers. As counter-measures Loke declared, “Maximum commission rate of 10% has been set for e-hailing service that is run by taxi drivers and 20% for services run by personal vehicle drivers.

“The surcharge rate is also limited to two times of the fare price.”

Loke explained the reason for a lower commision rate set on e-hailing service is because the government is encouraging cabbies to migrate to the new technological platform. He added that the government would set up funds to offer RM5,000 to cabbies so that they could buy new or used vehicles for the transition.

2. Registrations with relevant bodies

The Transport Minister revealed that there are about 10 e-hailing company in Malaysia now. He said in the new directive, these companies are required to register themselves with Companies Commission (SSM) or Cooperatives Commission (SKM).

The vehicles have to undergo inspection at Computerised Vehicle Inspection Centre (Puspakom) for at least once a year if they are more than three years old, registered with the Road Transport Department (RTD), NSTreported.

Besides, the drivers are now required to go back to driving school in this new directive.

“All drivers are required to undergo a six-hour driving training module at the fee of RM200 per head.

“The training can be done by various parties including taxi companies, driving schools or companies that provide such trainings which have been accredited by SPAD/APAD (Land Public Transport Agency),” said the minister.

Loke added that the meter inspection for taxi class licence is reduced to once a year compared to twice a year before.